Newman v Harrington[2015] QDC 327

DISTRICT COURT OF QUEENSLAND

1. [1]
   The claim by the appellant/plaintiff was for loss and damages suffered by the appellant following the purchase by the appellant of a light aircraft on or about 19 September 2006. Prior to entering into the contract of purchase, the appellant had engaged the services of the respondent, Patrick John Harrington, to carry out a pre-purchase inspection. The respondent/first defendant was to be paid a fee of $550. As required by government regulation, some seven months prior to the purchase, a periodic inspection had been carried out by the second defendant in the initial proceedings, Sandora Aviation Pty Ltd.

2. [2]
   Within seven months of purchase, the plane was found to have significant corrosion and certain other identified mechanical defects. The appellant spent $32,340 in having the plane repaired.

3. [3]
   The claim by the appellant against the second defendant was settled partway through the trial.

4. [4]
   In relation to the respondent, it was alleged by the appellant that the respondent was liable for the remaining costs of the repairs on the grounds of breach of contract, misleading and deceptive conduct or breach of duty of care.

5. [5]
   The appellant’s claim was dismissed by the learned magistrate with the appellant being ordered to pay the respondent’s costs on a standard basis up to a nominated date, and after that date, on an indemnity basis.

6. [6]
   The appellant appeals against those decisions on the grounds that the learned magistrate:

1. (a)
   failed to provide reasons at the time of the order;

2. (b)
   delayed in giving judgment;

3. (c)
   failed to provide adequate reasons for various findings;

4. (d)
   failed to determine the misleading and deceptive conduct claim;

5. (e)
   erred in excluding expert evidence;

6. (f)
   erred in finding the respondent carried out an in depth examination;

7. (g)
   erred in her assessment of the appellant’s loss; and

8. (h)
   erred in awarding costs on an indemnity basis.

7. [7]
   Both parties agreed that it was appropriate to deal with the question of leave to appeal and the substantive matters at the same time.

Approach to Appeal

8. [8]
   The grounds of appeal challenge the factual findings of the learned magistrate to a significant extent.

9. [9]
   There are limits on the extent to which an appellant court should substitute its own judgment for that of a trial court. These limits are discussed in such cases as Fox v Percy.^[1]On the other hand, appellate courts are obliged to conduct a real review of the reasons for judgment and, if it concludes that an error is shown, it is authorised and obliged to give effect to its own conclusion.

Failure to provide reasons at the time of the order

10. [10]
    The learned magistrate delivered judgment on 24 September 2013. Included in the order made dismissing the appellant’s claim was an order that reasons for judgment be given on or before 24 October 2013. The reasons for decision were in fact emailed to the parties’ solicitors on 21 November 2013, almost two months after delivery of the judgment.

11. [11]
    There is no doubt the preferred course, and in fact sometimes referred to as the “judicial convention”, is for the reasons to be supplied with the orders made. It is also recognised that there will be occasions when, for inescapable reasons, a very short delay may occur.  Kirby P in delivering the leading judgment in Palmer v Clarke^[2]found that a delay of three months certainly did not fall into the category of a very short delay and the matter was referred back for a retrial.

12. [12]
    The delivery of the reasons by email did not comply with the requirements of r 663 of the Uniform Civil Procedure Rules 1999 (“UCPR”).  The rules require, for actions such as this, that the reasons be delivered in court and then subsequently disseminated to the parties.  This reflects our system of open justice.

Delay

13. [13]
    The proceedings in the Magistrates Court were heard over a period of eight days; originally being set down for three days commencing on 7 December 2011.

14. [14]
    The matter not having been completed in its allotted time period, the matter was adjourned at the end of three days and resumed for further hearing over a further four days commencing on 21 March 2012, with the evidence being completed on 30 March 2012.

15. [15]
    The parties were permitted to provide written outlines of arguments, though it would seem no order was made with respect to the time period to be imposed for the exchange of the same. Following that exchange, objection was raised to certain other matters dealt with by the appellant in reply. The last of the written documents exchanged was filed on 21 August 2012.

16. [16]
    Judgment was delivered on 24 September 2013, some 18 months after the completion of evidence. The further delay in the delivery of reasons for judgment meant that there was a delay of some 20 months between the completion of evidence and the delivery of reasons.

17. [17]
    It is accepted that the delay between the taking of evidence and the making of a decision cannot, of itself, be a ground of appeal.^[3]

18. [18]
    The appellant contended that the learned magistrate erred in law in failing to use or misusing the advantage she had in properly considering and assessing the credit and reliability of witnesses and failing to provide adequate reasons for the decisions.

19. [19]
    The issue was considered by the Full Court of the Federal Court of Australia in Expectation Pty Ltd v PRD Realty Pty Ltd & Anor.^[4]There the Court said:

“Where there is significant delay in giving judgment, it is incumbent upon an appellate court to look with special care at any finding of fact challenged on appeal.  In ordinary circumstances, where there is a conflict of evidence, the trial judge who has seen and heard the witnesses, has an advantage…that advantage will ordinarily prove decisive on appeal unless it can be shown that the trial judge failed to use or misused such an advantage.”

20. [20]
    The Court held that:

1. (a)
   statements made by the trial judge of a general assertive character should be treated with “some reserve”;

2. (b)
   in view of the delay, a trial judge should provide a more comprehensive statement of the relevant evidence than would normally be required;

3. (c)
   no favourable assumptions should be made in relation to evidence apparently overlooked; and

4. (d)
   the trial judge should inform the parties why the evidence of a particular witness has been rejected and why the evidence of one witness should be preferred over another.

21. [21]
    The Court referred to useful statements made in earlier decisions, both in the English Court of Appeal and New South Wales Court of Appeal. In the English Court of Appeal decision in Goose,^[5]the delay was approximately 21 months.  Their Lordships there said:

“Because of the delay in giving judgment, it has been incumbent on us to look with special care at any finding of fact which is not challenged.  In ordinary circumstances where there is a conflict of evidence a judge who has seen and heard the witnesses has an advantage, denied to an appellant court, which is likely to prove decisive on an appeal unless it can be shown that he failed to use, or misused, this advantage.  We do not lose sight of the fact that the judge had transcripts of the evidence, as well as very extensive written submissions from counsel.  But the very fact of the huge delay in itself weaken the judge’s advantage, and this consideration had to be taken into account when we reviewed the material which was before the judge.  In a case as complex as this, it is not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he has come to study the evidence (both oral and written) and the submissions he has received with greater care, he will then go back to consider the effect the witnesses made on him when they gave evidence about the matters that are now troubling him.  At a distance of 20 months, Harman J denied himself the opportunity of making this further check in any meaningful way.”^[6]

22. [22]
    In another English decision of Flannery v Halifax Estates Agencies Limited,^[7]Henry LJ said:

“Where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other.  This is likely to apply particularly in litigation whereas here there is disputed expert evidence…”^[8]

23. [23]
    Given the delay, it is appropriate for an analysis to be conducted with great care of the reasons for the decision of the learned magistrate.

24. [24]
    The learned magistrate here concluded that the first defendant and the person whom he employed, Mr Harrison, were impressive witnesses. The learned magistrate stated that their evidence was clear and she said she had no doubt they conducted the inspections “as they said they did”.  The learned magistrate did not explain why she found that or how the witnesses were impressive.

25. [25]
    The learned magistrate detailed their qualifications and concluded they were both persons of considerable qualifications and experience.

26. [26]
    No similar exercise was conducted in terms of the witnesses called by the plaintiff. That was, at least in part, a product of a ruling made as to the expertise of two of the plaintiff’s witnesses, but it left intact their credit.

27. [27]
    The learned magistrate further noted that the respondent and Mr Harrison were the only witnesses who inspected the aircraft on the day of the pre-purchase. Of course, that is not at all surprising. In these types of cases, where expert evidence is being relied upon by one of the parties, often the expert will be dependent on drawing conclusions based on secondary evidence provided to them.

28. [28]
    The learned magistrate has not considered their evidence against the evidence of the witnesses called for the plaintiff. That is, of course, also a product of the ruling made as to the expertise of two of the plaintiff’s witnesses.

Expert evidence

29. [29]
    The appellant had called Mr Marshall and Mr Cain as experts to give opinion evidence about the corrosion in the aircraft.

Mr Marshall

30. [30]
    The learned magistrate found that Mr Marshall could give evidence about the detection and maintenance of corrosion in aircraft but not about the signs of the corrosion process, including the onset and development of corrosion and likelihood of corrosion being present at the time of the pre-purchase inspection.

31. [31]
    The learned magistrate found that Mr Marshall did not identify any aspect of the field of corrosion in which he demonstrated he was an expert, he did not provide any opinion based on his expert knowledge, he did not identify any assumption of primary fact upon which his opinion was offered, and he did not demonstrate an examination of scientific or other intellectual basis for the conclusion reached.

32. [32]
    The learned magistrate further said that Mr Marshall had said, in giving evidence, that he was not a corrosion expert. Accordingly, the learned magistrate held that Mr Marshall could not give admissible opinion evidence as to whether there was corrosion in the aircraft that should have been detected by the respondent when he conducted the pre-purchase inspection.

33. [33]
    The learned magistrate further found that Mr Marshall conceded much of what was put to him.

34. [34]
    Mr Marshall was subpoenaed to give evidence on behalf of the appellant. He had been engaged by the appellant to conduct the periodic inspection when the corrosion was detected. It was clear that Mr Marshall did not wish to be involved in the proceedings. It would seem that was in part because Mr Marshall considered that he was not being sufficiently compensated in a monetary sense. With the delays occasioned in the progress of the trial, by the time Mr Marshall was sworn he had been waiting outside the Court room for several days and he had a business to run. That was most unfortunate.

35. [35]
    In the course of giving evidence, issues also arose as to the manner in which Mr Marshall recorded payments made for services rendered, necessitating claims by him at times for privilege in responding to certain questions about the payments which were made. The learned magistrate made no adverse credit findings against Mr Marshall nor was it submitted on appeal that he was not to be believed as a witness of truth.

36. [36]
    Unfortunately, the last part of the cross-examination and re-examination of Mr Marshall were not transcribed. In this court, no explanation was offered and no point was made about that, nor was it suggested that any critical evidence was missing.

37. [37]
    Mr Marshall, like Mr Harrington and Mr Cain, was a Licensed Aircraft Maintenance Engineer (“LAME”) who held a certificate of approval entitling him to conduct a maintenance workshop and issue maintenance release for work done on aircraft.

38. [38]
    Mr Marshall conducted his own business from Riddells Creek Airfield, just North-West of Melbourne. He predominantly worked on single engine aircraft, mainly single engine Pipers and Cessnas and some vintage aircraft.

39. [39]
    Mr Marshall had 17 years’ experience in the industry, having started work at the age of 17. Under cross-examination, Mr Marshall said he had held his licence for 12 or 13 years and that he was a qualified pilot. Mr Marshall gave evidence of having “spent most of my time re-building flight controls for aircraft and wings for corrosion point of view”.^[9]In examination in chief, when asked what was his experience to identify corrosion, he responded:

“No formal training on corrosion identification, if that’s what you mean.  It’s all on the job experience which has been all my adult life”.^[10]

40. [40]
    Mr Marshall gave very detailed evidence of the different types of corrosion found in aircraft, how corrosion can be found and how corrosion is treated in the process of maintaining the aircraft. In saying he had experience in identifying corrosion, Mr Marshall said that “every inspection you find corrosion”.^[11]He continued, “There’s corrosion in every aircraft”.^[12]

41. [41]
    Mr Marshall gave evidence that the type of aircraft purchased by the plaintiff had a reputation for corrosion. He said it is mainly galvanic corrosion between the steel plate and the aluminium. He spoke of the steel plates of the wing rear spar. He also referred to intergranular corrosion in the main spar. He said, the first place to look at is the steel plates on the wings attached in the main spars. He said, it is a personal assessment of how bad that corrosion is.^[13]

42. [42]
    There can be no doubt that Mr Marshall was adequately qualified to give evidence of the inspection, classification and treatment of corrosion in aircrafts. His admission that he did not necessarily know the precise terminology which may be used by others, did not impact his ability to give evidence as to the development of corrosion in aircraft. Bollen J in Rose v R^[14](with whom Duggan and Mullighan JJ agreed), stated:

“There is a place for the evidence of what I call ‘the practical expert’.  An engineer, both from practical observation or work and study from books or lectures, will understand the workings of an internal combustion engine.  So will a mechanic who has worked on engines man and boy for (say) these 30 years.”^[15]

43. [43]
    Any concession made by Mr Marshall in the course of giving evidence were concessions in relation to one type on corrosion, intergranular corrosion, and not the other types of corrosion including galvanic corrosion. Whilst there was acceptance by Mr Marshall that intergranular corrosion may “blowout”, he quickly added that he was discussing “hypotheticals”.  His evidence in relation to galvanic corrosion remained that it developed slowly.

44. [44]
    The evidence of Mr Marshall in my view was admissible and regard should have been had to it in assessing whether or not the respondent had conducted a proper examination of the aircraft.

Mr Cain

45. [45]
    The learned magistrate accepted Mr Cain was an expert for these proceedings. She accepted that he was an experienced LAME and accepted he would have specialised knowledge in the detection and removal of corrosion in aircraft and the maintenance of aircraft. The learned magistrate accepted him as a witness of truth. The issues related to the extent of his expertise and the weight to be given to some aspects of his opinion evidence.

46. [46]
    In considering what weight to give to his evidence that the corrosion in this aircraft ought to have been detected by the respondent, the learned magistrate concluded that he did not have the specialised knowledge to scientifically identify corrosion nor to identify the development of corrosion and importantly in this case, whether the corrosion found in 2007 should have been evident in September 2006. The learned magistrate said Mr Cain did not prove how he could demonstrate such specified training, study or experience to show that he became an expert.

47. [47]
    Mr Cain’s evidence was that he had some 40 plus years’ experience. He had been the owner of similar type aircraft over a period of some 15 years and over that time he had owned four such aircraft, all of which he had maintained. He had also maintained other light aircraft at various times.

48. [48]
    He had been involved in loss assessing for insurance companies following light aircraft accidents. In that role he was responsible for assessing the damage to them, determining their requirements for the repair of them and, together with the maintainers, to repair them.

49. [49]
    Through his practical experience, he had evidently developed knowledge about corrosion, including its identification and its rate of growth. It was clear that Mr Cain understood the different types of corrosion and was able to explain the underlying scientific theories. He was able to give detailed evidence as to the things which effect its’ rate of growth.

50. [50]
    It is true that Mr Cain never saw the aircraft at the relevant time, though he was very familiar with this type of aircraft and had previously performed maintenance on this particular aircraft.

51. [51]
    For the purposes of giving evidence, he had relied on photographs; the first of which were taken at the time of the pre-purchase inspection by the respondent, with the later ones being taken at the time of the periodic inspection conducted by Mr Marshall.

52. [52]
    In referring to one of the photographs taken at the pre-purchase inspection, Mr Cain gave evidence of having enlarged the photograph on his computer and that when he did so he could observe tell-tale signs of corrosion. The learned magistrate found that he was not sufficiently experienced to give that evidence. The learned magistrate considered that his description of the process he undertook of blowing up the photos on his computer reduced the weight of his evidence. The learned magistrate referred to the decision of the Court of Appeal in R v Banhelyi,^[16]whilst acknowledging the issues in that case were different to this case.

53. [53]
    The process undertaken by Mr Cain was merely an aid to assist him in giving his opinion and there is no evidence that the process compromised his opinion. It is not unusual for experts to rely on photographs in order to give their opinion. In my view, the leaned magistrate erred in her decision not to give any weight to his opinion as to the existence of corrosion in September 2006.

What the learned magistrate should have found

Corrosion

54. [54]
    Accepting as I do that reliance should be placed on the evidence of Mr Marshall and Mr Cain, it is convenient to address the substantive matter in issue: whether or not the respondent had properly performed the inspection.

55. [55]
    Both Mr Marshall and Mr Cain gave evidence that the corrosion found in the aircraft in May 2007 by Mr Marshall must have been present at the time of the pre-purchase inspection in September 2006. By the time of the inspection by Mr Marshall, the aircraft was determined by him to be un-airworthy and the extent of corrosion such that a defect report was required to be lodged with the Civil Aviation Safety Authority (“CASA”). In his report, Mr Marshall described the defects as being the result of “corrosion” and “lack of maintenance”; with the evidence of Mr Marshall being that the lack of maintenance was not attributable to the appellant in any way.

56. [56]
    Mr Marshall took photographs of the aircraft and those photographs were tendered as evidence, being Exhibit 15.

57. [57]
    Mr Marshall identified the corrosion he observed at the wings as galvanic; that is corrosion between different types of metals. He said it was not the early stages of corrosion and it was not treatable.

58. [58]
    Mr Marshall was also shown other photographs where the corrosion had crusted out and he referred to that as intergranular corrosion: it starts from the inside and works its way out. He also described it as, “it’s blown up.”^[17]

59. [59]
    Mr Marshall accepted in cross-examination that intergranular corrosion can just blow out at some stage. Mr Marshall accepted that if an aircraft had been in far North Queensland then came down to South-East Queensland and then was taken to Victoria, intergranular corrosion could blow out in a short space of time but he was very quick to add “it’s hypothetical”.^[18]

60. [60]
    Mr Marshall gave evidence that he knew the state of the aircraft within the first few hours of his inspection. In his report,^[19]Mr Marshall said that the corrosion found was “far beyond normal practices”.He said, 

“the deterioration found was in my opinion most likely the effect of long term outside storage and perhaps the salt water environment: this kind of deterioration generally happens over a long period of time.”

61. [61]
    Mr Marshall did accept that a change of conditions could cause the intergranular corrosion to blow out but said that did not explain the extensive other forms of corrosion. By the time he was conducting the periodic inspection, the state of the aircraft was such that he prepared and lodged a defect report with CASA.

62. [62]
    In his reports, Mr Cain in commenting on the corrosion found in the wings, which necessitated the removal and replacement of the wings, stated that “it’s not something that’s happening overnight”.^[20]  

63. [63]
    In giving his opinion, Mr Cain had the benefit of the photographs taken by Mr Marshall and also the photographs taken at the time of the pre-purchase inspection. Mr Cain was clearly able to observe the extent of corrosion found in the aircraft by Mr Marshall. By reference to those photographs, his evidence was the discovery of corrosion in the flat bracket would have been easily visible using a torch lighting mirror. His evidence was that there was no obstruction through to the top end of that “in the wing cavity where the bracket goes into the wing”.^[21]Mr Cain’s evidence was that there would have been visible signs on the U bracket, which if a prudent LAME looked up from underneath, “I believe it would be seen”.^[22]Mr Cain’s evidence was that it was galvanic corrosion.  His evidence was that the corrosion would have been there “in excess of 12 months”.^[23]

64. [64]
    By reference to the pre-purchase photographs, Mr Cain’s evidence was that on the photograph marked 330 there were what appeared to be white dots in the area where the nut plate joins the top of the spar underneath the spar cap. He stated that “the white dots would have been the first of pitting corrosion showing”.^[24]Mr Cain later said, “It’s hard to determine but it’s an area which you would have certainly looked at”.^[25]

65. [65]
    Mr Cain also gave evidence referring to the same photograph of the skin being raised and he described it as the skin “sitting quite proud of the upper spar cap”.^[26]In stating that, Mr Cain said that he appreciated the skin is held down when the tank is put into position, but he said that the fact that the skin is slightly raised means “it’s a possibility that there is corrosion on top of the cap under the top – under that skin”.^[27]He said in his written report that the raised skin and white residue would have required that a prudent LAME look further.

66. [66]
    In Mr Cain’s further written report dated 13 February 2012, Mr Cain said,

“The raised skin which is evident in this photograph is an indication that the condition of the airframe was not normal in that area.  Corrosion in the airframe often causes the skin to become raised, and in my opinion the raised skin area in the photograph indicates the existence of corrosion in or around the area and around the rise in the fuel tank cavity.”^[28]

Based on the evidence of Mr Marshall that was one area where extensive corrosion was found.

67. [67]
    In his report, Mr Cain stated that it was his opinion that the respondent should have undertaken further disassembly of the aircraft before purporting to declare the area corrosion free.

68. [68]
    In comparing the evidence of Mr Cain and Mr Marshall and the evidence of the respondent and Mr Harrison, the learned magistrate said that the respondent was the only LAME who had experience in conducting a pre-purchase inspection. The learned magistrate concluded that the respondent was:

“A prudent and responsible LAME who established an expertise in what is required in conducting a pre-purchase inspection and I consider the methodology of his pre-purchase inspection as not only adequate but extensive.”^[29]

69. [69]
    The learned magistrate did not refer to the evidence given by both Mr Cain and Mr Marshall in relation to pre-purchase inspections.  In examination-in-chief, Mr Marshall was asked how long would it take a LAME to conduct a pre-purchase inspection.  Mr Marshall responded, “that is an open – very open ended.   I – because what’s a pre-purchase inspection, really?  I don’t do them”.When asked, “Why is that?”, he responded, “For this very reason.  It’s a well-known fact”.^[30]He continued, “… so if I was to do it – my response is always you basically have to do a periodic inspection to do … to know what you’ve got.  There’s no other way”.^[31]When asked for a figure, he said, “I would spend a day – on an inspection of that type; so eight hours”.He said that would be inclusive of a log book search as the norm.^[32]

70. [70]
    Mr Cain’s evidence was that a pre-purchase inspection was the same as carrying out a periodic inspection. He agreed with the respondent and Mr Harrison that it was an inspection and that the retainer did not require any maintenance work to be done. He agreed that if anything was found, it was simply noted.

71. [71]
    He said:

“a pre-purchase inspection could take eight hours, you could spend longer – you’ve got to remove all the panels, the same as you would, you’ve got to remove trims from the interior of the aircraft to look through into the floor to check spars and the floor cavities internal; not just look at the outside of the aircraft”.^[33] 

72. [72]
    Under cross-examination, Mr Cain said, “I believe he should carry it out to the same level and same depth to satisfy the potential purchaser of the aircraft that the aircraft is, or the actual status of the aircraft”.^[34]Mr Cain said, “I believe he should inspect the complete aircraft”.^[35]In the course of his evidence, Mr Cain stated that he believed the inspection should have been the same as “the inspection component of schedule 5 because it’s the only legislation one can hang their hat on in the event of such an action like that occurring afterwards”.^[36]

73. [73]
    Mr Cain, was referred to the checklist completed by the respondent and was critical of the manner in which that checklist had been completed. He said it was unclear what the ticks meant but noted the comment at the end that “no corrosion was evident”.^[37]Later in cross-examination, he continued, “I believe right through the checklist it should have been written what was found in the column that was provided to the right-hand side of the ticks”.^[38]He described it as a substandard document for that type of inspection.

74. [74]
    When asked, what if nothing was found, Mr Cain replied, “nothing in an aircraft that was produced in 1962, I find that hard to accept”.^[39]

75. [75]
    In considering the explanations to how it was missed, Mr Cain said, “Things get passed”.^[40]Mr Cain further said that “he believed that to do the job properly, to establish no corrosion, I believe the inspection panels should have been removed, and wing tips, etcetera, removed to do a thorough inspection of the wing area”.^[41]When challenged, he said he was just talking about “removal of inspection panels; not aircraft in parts on the hangar floor”.^[42]He explained the inspection panels are screwed underneath the wing. 

76. [76]
    Both the respondent and Mr Harrison gave evidence as to the thoroughness of the inspection they performed. Mr Harrison initially said his inspection was replicated by the respondent. However, later in his evidence and in the evidence of the respondent, it was clear that the inspection was primarily conducted by Mr Harrison and that the respondent attended to view the aircraft at various times, of his own volition or when called by Mr Harrison. The respondent said that in doing an inspection of the area where the fuel tanks were removed and the tail cone, he used his naked eye, a torch and a mirror. The respondent said he saw nothing that would arouse his need to investigate further. The respondent said “To the best of our ability, we inspected and found no corrosion”.^[43]

77. [77]
    When shown photograph numbered 330 of the area where the fuel tank had been removed, the respondent did not accept it showed signs of anything which suggested a need to investigate further. The respondent said it was usual to see “little ripples”.^[44]In contrast, when Mr Harrison was shown the photograph, he said, “I don’t know why that would be slightly raised.”^[45]When asked whether he would have concluded it was corrosion or was evidence of corrosion, he said, “no – not at the time”.He continued, “from my memory, there was definitely no sign of corrosion”.^[46]

78. [78]
    Both the respondent and Mr Harrison considered the aircraft to be in extremely good condition. Mr Harrison said, “the year of the manufacture and the age of the aircraft, I thought it was in exceptional condition”.^[47]The respondent accepted that the words he would have used were “It was a good aeroplane”.^[48]      

79. [79]
    When asked about the corrosion which had been subsequently detected by Mr Marshall, the respondent was critical of the log book entries and the worksheets completed by Mr Marshall but accepted that he has “no doubt that – that Mr Marshall’s observations were true”.^[49]The respondent when shown the photographs accepted the photographs depicted corrosion but said he had no proof that they were photographs of this plane.  Against this, the photographs were tendered through Mr Marshall without objection.  They were clearly tendered on the basis that they were taken of the aircraft about which he was giving evidence.

80. [80]
    When asked for an explanation for the development of corrosion between the date of the pre-purchase inspection and the date some seven months later, the respondent said that the aircraft had been moved to another location, adding the comment “whether that’s a factor”.^[50]Under cross-examination, the respondent accepted that Cairns (where the aircraft was previously located) was a more corrosive environment than Kyneton (where the aircraft was located whilst owned by the appellant). When asked whether Cairns was a more corrosive environment than Kyneton, the respondent said, “Yeah, there’s no sea air at Kyneton”.^[51]

81. [81]
    The respondent also referred to an example given by CASA where the aircraft was washed with detergent as possibly causing the onset or blowout of corrosion. There was no evidence that the appellant had washed the aircraft in a manner which could have caused the corrosion.

82. [82]
    The respondent stated that at the airfield where the plane was being kept by the appellant, the aircraft was required to taxi on grass and said that, “taxiing around that field on the grass they may get moisture thrown up onto the under surface of the aeroplane”.^[52]In cross-examination, the respondent accepted that in fact the taxiing area of the airfield is now gravel and not grass.  The evidence also was that the appellant used the bitumen runway.

83. [83]
    The respondent also said that he could recall from when he lived in Victoria and he referred to it getting “miserable rain drizzle down there”.^[53]  He referred to the impurities in the water of causing some contamination of the water with acid.  The evidence of the appellant was that the aircraft was hangared in a waterproof hangar with a concrete floor.

84. [84]
    When asked further about the extent of corrosion found, the respondent said, “I don’t know.  I have no explanation but that – that happens from my personal experience”.^[54]

85. [85]
    Under cross-examination, the respondent’s evidence really was that the rate of development of corrosion in aircraft is affected by a number of factors. However none of the factors identified as possible factors increasing the rate of corrosion, on the evidence, were proven.

86. [86]
    The respondent was also asked about the nature of the pre-purchase inspection to be conducted. The respondent accepted that as part of that inspection the appellant was “very concerned”about corrosion.^[55]He accepted that the appellant asked him to conduct a “thorough corrosion check”.^[56]The respondent would neither accept nor deny that he said, “It’s one of the cleanest” planes he had seen.^[57]He did accept that he told the appellant to buy it: to proceed with the purchase.^[58]In his written pre-purchase inspection report, the respondent said, “The aircraft appears to have no corrosion”.

87. [87]
    Mr Harrison’s evidence was that he had spent four hours from start to finish, including removal of parts, a draining of the fuel tanks and refuelling. Under cross-examination, Mr Harrison seemed to accept that the time taken to remove and replace all of the items which he identified had been removed would be almost four hours. If that evidence is accepted, the respondent simply would not have had sufficient time to properly inspect the parts of the plane where the corrosion was found by Mr Marshall.

Conclusion

88. [88]
    Regard should have been given by the learned magistrate to the evidence of Mr Cain and Mr Marshall, who were called on behalf of the appellant. That evidence is admissible as expert evidence and ought to have been given due weight. With the admission of that evidence, the compelling inference is that the corrosion should have been identified at the time of the pre-purchase inspection by the respondent. There is simply no satisfactory evidence explaining the presence of the extensive corrosion some seven months subsequent to the pre-purchase inspection. The inference is also inescapable that the type of inspection provided by the respondent was not one likely to produce a reliable opinion as to the presence or absence of corrosion in an aircraft.

89. [89]
    The above conclusions are reinforced by the greater weight that should be attached to contemporary material such as photographs, objectively established facts and the apparent logic of events over oral testimony, the absence of any real explanation for the credibility findings made in favour of the respondent and his witness in this case and the extent to which regard should be had to those findings given the delay between the conclusion of the evidence and those findings. For the reasons given earlier in relation to the delay in giving judgment and the simple way in which the findings were stated, it is not possible to place significant weight on the learned magistrate’s findings as to the credibility of the respondent and his witness.

Mechanical defects

90. [90]
    In addition to corrosion, the appellant has claimed the cost of the other defects identified and repaired by Mr Marshall. These other defects appear to have been treated by both parties as a side issue with few questions being directed to any of the witnesses in relation to those defects.

91. [91]
    There were three major defects forming the basis of this part of the claim:

1. The crack in the spinner back plate;

2. The worn cable pulleys; and

3. The leaking undercarriage struts.

Included in the cost of repairs of these items was the cost to repaint the aircraft to match existing, to rebalance the flight controls and to complete the major defects report and certify. The total cost was $7,227.92.

In relation to the spinner back plate, the respondent accepted that in order to properly check the spinner back plate the propeller would have to be pulled off and he did not do that.  The respondent explained that the removal of the propeller required certain of the bolts removed to be crack checked and certification and log book entries: “It’s subject of an airworthiness directive”.^[59]The respondent said for that reason the removal of the propeller was not something usually done in pre-purchase inspections. The respondent said that it was something that could crack in service in a short space of time.  The respondent accepted that there could have been a small crack that he missed but confirmed the observation and inspection of that is part of the periodic inspection. 

92. [92]
    In terms of the control pulleys, the respondent’s evidence was that the pulleys were also a maintenance function and must be checked as part of the periodic inspection. He further said that he would have expected some comments in the documentation if there had been issues. The respondent gave evidence of moving the pulleys and listening to hear if there was any grinding. He said that they didn’t in the course of the pre-purchase inspection observe any pulleys that were seized. The respondent said that in the course of a periodic inspection control pulleys are “repaired or rectified or a new pulley put in or the pulley taken out and lubricated and refitted back in.”^[60]The respondent gave further evidence that the pulleys can seize at any time.

93. [93]
    In relation to the oleo struts, the respondent’s evidence was that he would expect it to have been mentioned in the documentation. The respondent said it was something the pilot was required to check as part of any pre-flight inspection; the regulations provide for the checking of the landing gear oleo extensions.

94. [94]
    Mr Middleton, being one of the witnesses called on behalf of the appellant, accepted that the oleo struts were something a pilot looked at and he said that if there had been a problem with the oleo struts “he wouldn’t have flown the plane”.^[61]Mr Cain also referred to the pilot checking the oleo struts and further said that a pilot should notice any leaking. 

95. [95]
    In referring to all three defects, the respondent said they were all normal maintenance functions.

96. [96]
    Mr Marshall was also asked about the mechanical defects. In examination in chief, after giving detailed evidence as to the corrosion defects, Mr Marshall then said they were “the normal 100 hourly items, such as - I think there were a couple of pulleys to be changed and cracks being in a back plate as well, from memory.”^[62]

97. [97]
    Mr Marshall agreed that it was absolutely normal in a periodic inspection for some mechanical defects to be found. In referring to the cracked back plate, he said it was usually caused by an out of balance situation. He was also asked about the undercarriage struts and agreed it was possible that something could have happened to them after the pre-purchase inspection that resulted in there being no oil in them.

98. [98]
    The plaintiff’s expert witnesses did not give any evidence which would suggest those defects must have been present at the time of the pre-purchased inspection. The evidence given is consistent with the defects having occurred after the inspection by the respondent. In those circumstances, it is not possible to find on the balance of probabilities that the respondent was negligent in not observing those three mechanical defects.

Misleading and deceptive conduct

99. [99]
    The learned magistrate failed to deal with the claim made pursuant to s 38 of the Fair Trading Act 1989. 

100. [100]
     In the statement of claim it is alleged that the respondent represented and warranted, amongst other things, that the aircraft appeared to be free from corrosion.^[63]The respondent admits the making of that representation.  In his evidence, the respondent said he also told the appellant that it was a good aeroplane and he told the appellant that it was “the cleanest Cherokee he had seen for a long time”.^[64]

101. [101]
     There were, on the findings made in this Court, signs of corrosion at the time of the inspection which warranted further investigation. If that investigation had been undertaken the corrosion would probably have been discovered. The inference is that the inspection was so limited in scope so as to give no reasonable basis for the respondent to represent that the aircraft was free from corrosion.

Loss and damage

102. [102]
     On the basis of my finding, it follows that the plaintiff is entitled to damages representing the costs of rectifying the corrosion.

103. [103]
     The amount of damages claimed in the amended statement of claim was $32,340. That sum is further particularised in paragraph 8. The repair work in subparagraphs (a) and (b) totalling an amount of $22,172.08, relates to costs to rectify the corrosion. The repair works in subparagraph (c) totalling an amount of $7,227.92, relates to the costs to rectify the other mechanical defects, repaint the aircraft to match the existing, rebalance the flight controls and to complete the defects report and certify. The final payment for the repair costs appears to have been made by the appellant on 23 August 2007.^[65]

104. [104]
     Based on my findings in relation to the mechanical defects some of the costs in subparagraph (c) are not recoverable. Possibly, the repainting of the aircraft to match existing and completion of major defects report and certification were incurred because of corrosion which existed in the aeroplane but the evidence does not enable me to determine the amount of those costs.

105. [105]
     In determining the amount of any award of damages, the amount is to be reduced by the amount of $5,000, being the amount paid by the vendor of the aircraft in the appeal proceedings. That amount has already been deducted from the amount of the total claim. That amount was paid outside of any proceedings.

106. [106]
     In the course of the trial, settlement was also reached between the plaintiff and the second defendant and a payment made by the second defendant in amount of $5,000. In the submissions made on behalf of the plaintiff, it was suggested that the settlement sum should be split equally between claim and cost. That approach may be a relevant matter in considering the actual amount in dispute between the parties in terms of any grant of leave to proceed, but cannot be adapted given the absence of any figure for those costs.

107. [107]
     Given the findings which have been made, it seems more appropriate for that amount to be deducted from the amounts actually paid to rectify the corrosion. The loss should be determined as follows:

$32,340 - $5,000 - $7,950.72 - $5,000 = $14,389.28.

Interest

108. [108]
     The plaintiff claims interest in the statement of claim. Contrary to the UCPR it did not particularise the nature of interest claimed. In conformity with the practice I award interest as it applies for judgments in default. Adopting the Supreme Court Calculator the interest on $14,389.28 is $8,567.15.

Costs

109. [109]
     Given the findings, the costs order made by the learned magistrate in her judgment dated 29 September 2014 must also be set aside.

110. [110]
     Even without the findings which have now been made, it is said the costs order should be vacated. In making the costs order the learned magistrate relied on the offer to settle made on behalf of the defendant to the plaintiff under cover of a letter dated 14 February 2011 which was that each party withdraw from further proceedings and each party meet its own costs. The offer was said to be made under part 5 of the UCPR. It was acknowledged by the learned magistrate that r 361 of the UCPR did not apply. As the learned magistrate observed, the issue of costs was to be determined under the general costs provision. As the plaintiff was unsuccessful, the plaintiff was ordered to pay the defendant’s costs.

111. [111]
     Relying on the authority of Sultana Investments Pty Ltd v Cellcom Pty Ltd,^[66]the learned magistrate considered in the circumstances, having regard to the offer made and, based on her findings in relation to the lack of expert evidence, it was an appropriate case to exercise her discretion to award indemnity costs after the date of the offer.  However, based on statements made by the Court of Appeal in Jones v Millward^[67]and by Justice Philippides in Rolls v Radford & Ors (No 2),^[68]it is difficult to see how the offer made by the defendant would be regarded as a proper offer of compromise.  In those circumstances, it is difficult to see that there was a proper basis for an indemnity cost order after the date of the offer. 

112. [112]
     Absent the offer, it is impossible to see on what other basis it could be said the conduct of the plaintiff was such as to justify an indemnity costs order.

113. [113]
     In these circumstances, it is clear that the discretion of the learned magistrate miscarried and the costs order (even absent the findings) would need to be set aside.

114. [114]
     In considering the appropriate costs order to now be made, the appellant has been successful in obtaining judgment for a sum of money. The judgment is clearly more favourable than the offer made to the plaintiff by the defendant. The provisions of r 361 do not apply, with the result that the general provisions of r 681 are relevant.  In the exercise of my discretion under that rule, assuming there are no relevant offers nor conduct by the parties or other circumstances which would justify the making of any order contrary to the general rule, costs should follow the event.

115. [115]
     The appellant is entitled to her costs of the proceedings and the costs of this appeal on a standard basis to be assessed.

116. [116]
     The appellant is entitled to interest from 27 August 2007.

117. [117]
     Accordingly, the orders made are;

1. leave granted to appeal;

2. appeal upheld;

3. the orders made by the learned magistrate on 24 September 2013 and 29 September 2014 are vacated;

4. the following orders be substituted:

1. (a)
   judgment for the plaintiff in the sum of $14,389.28 together with interest of $8,567.15, calculated using the Supreme Court calculator

2. (b)
   the defendant is ordered to pay the plaintiff’s costs on a standard basis, as agreed or as assessed.

5. The respondent pay the appellant’s costs of the appeal on a standard basis as agreed or as assessed.